Even if Murray's compromise was politically stable, and was more economically efficient than the current system, it would still be handing out free money, and would surely still result in the decadence you have documented. I don't see the Citizens Basic Income as much of a fix for anything, to tell the truth.

Posted by Rob Spear at April 27, 2007 04:59 AM

On the contrary, the CBI could work extremely well if implemented properly since it would removes disincentives to "good" behaviour and incentives to "Bad". Consider, 60m people, c £5000 each, = 25% of GDP. Fix it as a proportion of GDP and you balance your budget and share the proceeds of growth. All payments are thus not means tested and if you raise the tax threshold to £10000 (ie 2* CBI) yuo remove ability of politicians to play with that. In effect people can work and take home equivalent of £15k net before paying tax. 10% NI for both employers and employees would not act as a disincentive to employ (and could perhaps buy the health insurance) All children to get CBI in terms of school voucher, so no incentive to have lots of children and every incentive for schools to produce what parents want not what state bureaucrats want. For pensioners £5000 is equivalent to the "best" state pension so no one will get less and there is no disincentive to save - it will also grow with nominal GDP and people can choose to work as long as they like. Fathers could have half their CBI paid to the mother of their children. Subsequent mothers get half the rest and so on. A disincentive to multiple fathers and subsequent mothers and no need for CSA. CBI goes to British Citizens, making it worth something an in effect a subsidy to british workers in low paid jobs, especially since much of the higher income CBI will be recycled into the service sector employment. Micro incentives could be put in place.....club together and employ a music tutor. COme to that would it not be a nicer society if musicians, poets etc had some basic income and didn't have to become accountants? I digress, implemented fully and with little room for lobbying and meddling a CBI could be at the heart of a 21st Century welfare state.

Posted by MARK T at April 27, 2007 04:21 PM

Murray's new scheme reminds me of Milton Friedman's negative income tax plan.

Richard

Posted by Richard Garner at April 27, 2007 11:35 PM

One of the biggest flaws with CBI is the issue of fraud and the incentive to scramble to these shores to get a piece. To avoid fraud you would need pretty robust identity, probably a DNA database, if truth be told.

BTW, NI, housing benefit etc should be inside CBI, IMHO, but the payment of a state approved minimum healthcare package (from a choice of private providers) would be compulsory. The private players would compete on price, but regulated not to cut below a certain level of provision.

Posted by Roger Thornhill at April 28, 2007 04:47 PM

Fraud would indeed be an issue, but then it is already. And if only granted to British Citizens then there would need to be a rigourous definition and application process. A break period i.e no fast track would act as a large disincentive for wefare tourists as there would be no other means of "support"

Posted by MARK T at April 30, 2007 09:34 AM

MARK T - I see your point regarding replacing Child benefits. Regarding fraud, the difference with current systems is that the CBI would apply to every single citizen, and would require that the bureaucracy keep tabs on them all, including the homeless; people with multiple houses; those living temporarily abroad, and so on. The current system only has to cater for those desperate enough to fill out the forms to get the benefit.

The point I was originally aiming at is that, judging by the various dossers I had the displeasure of growing up with, large numbers of people would still do their utmost to do nothing but sit around taking drugs all day. Many of them would doubtless be self declared musicians and poets, but don't expect outpourings of inspiring art from the CBI supported classes.

Posted by Rob Spear at May 1, 2007 04:26 AM

Rob, point taken, the real advantage of a CBI is that it isn't means tested and thus the only "check" has to be citizenship. Payment can/should be largely direct into bank accounts (including the citizen's bank being suggested for existing payments)This removes a vast amount of the bureacracy associated with the welfare state which is not an insgnificant part of its cost. (The administators would of course be the big losers and the biggest lobbyists against a CBI) It's not really about the scrotes, rather about removing the incentives for otherwise good people to do bad things. Fix the starting rate of tax at 2x CBI and people will go out to work, even if it is part time. Retirement is no longer compulsory, nor are savers penalised. Employing British citizens is effectively subsidised since they can accept less and still get the same "take home" which would do much to remove the black economy and "re-legitimise" large sections of society who have been put beyond the law by the current system. At the same time as stopping "good" people doing "bad" things, we encourage "bad" people to do "good" things, i.e the evil capitalists who foot the bill for this lot will allocate their CBI in ways that they (rather than the govt)see fit, so 95% of government "inspectors" need to retrain as something useful in the service sector. What? well they will have to work out what real people (rather than ministers) want.

Posted by MARK T at May 8, 2007 02:22 PM

The Liberal Democratic Party in Australia has come to similar conclusions.

We are proposing a 30/30 policy at the upcoming Federal elections.

Essentially, all citizens receive the first $30k of earnings tax free. Thereafter there is a 30% flat tax.

For those who earn less than $30k, they receive a payment according to the formula $30k minus earnings * 30%.

Hence if you have no earnings, you receive a payment of $30-0*30% or $9k.

The policy is here.

Posted by pommygranate at May 23, 2007 12:17 PM